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What started out as a squabble between a small natural gas options-trading firm and its biggest customer has ballooned into something a bit more sordid, especially for investors in the firm. Optionable Inc. operates an electronic trading system and the Bank of Montreal was its biggest customer, until it suffered over $400 million in trading losses and pulled the plug on doing any more business with Optionable. Among the investors in Optionable is Nymex Holdings, which operates the New York Mercantile Exchange (NYMEX), one of the leading commodities exchanges. Nymex bought a 19% stake in Optionable in April, but it doesn't seem to have done as much due diligence as it might have liked. It turns out that Optionable's CEO at the time, Kevin P. Cassidy, has a bit of a questionable past, with convictions in the 1990s on credit card fraud and tax evasion charges; he resigned on May 14. A quick check of the Bureau of Prisons website's inmate locator for one "Kevin Patrick Cassidy" shows that the prisoner was released from federal custody in March 1999. Optionable's public filings make no reference to Cassidy's past brushes with the law. For example, its 8-K filed in 2006 (here) announcing his appointment as CEO only states: "Mr. Cassidy, age 46, previously served as the Company's Chief Executive Officer from February 2000 through March 2004. Additionally, Mr. Cassidy is a 50% stockholder of and serves as the Managing Director of Capital Energy Services LLC ("CES") and as a principal of Sleepy Hollow Coffee Roasters, Inc. ("Sleepy Hollow")." Questions about the trading losses are starting to swirl, and Optionable's stock has lost over 90% of its value in the past few weeks. As a publicly-traded company, the SEC is likely to start asking questions about Optionable's disclosures and financial statements. A Bloomberg story (here) discusses the controversy. (ph)